Earnings Call Transcript - FVRR Q4 2021

Operator, Operator

Hello, everyone and welcome to the Fiverr Q4 Fiscal 2021 Earnings Conference Call. My name is Charlie and I'll be coordinating the call today. I'll now hand over to your host Jinjin Qian, Head of Investor Relations to begin. Jinjin, please go ahead.

Jinjin Qian, Head of Investor Relations

Thank you, operator and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the fourth quarter ended December 31, 2021. Joining me on the call today are Micha Kaufman, Founder and CEO; and Ofer Katz, President and CFO. Before we start, I'd like to remind you that during this call we may make forward-looking statements and that these statements are based on our current expectations and assumptions as of today and Fiverr assumes no obligation to update or revise them. A discussion on some of the important risk factors that could cause actual results to differ materially from any forward-looking statements can be found under the Risk Factors section in Fiverr's most recent Form 20-F and other filings with SEC. During this call, we'll be referring to the non-GAAP financial measures, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures are provided in the earnings release we issued today. And our shareholder letter, each of which is available on our website at investors.fiverr.com. And now I will turn the call over to Micha.

Micha Kaufman, CEO

Thanks, Jinjin. Good morning, everyone and thanks for joining us on the call today. 2021 was a remarkable year for us. It was a year of significant growth in terms of both revenue and profitability. For full year 2021, revenue was $298 million, representing a 57% year-over-year growth and a 178% growth on a two-year basis. We hit $1 billion in annual GMV for the first time ever. We also generated an adjusted EBITDA of $23 million in 2021, implying an adjusted EBITDA margin of 7.7%, compared to 4.8% just a year ago and a negative 16.8% two years ago. Our results continue to demonstrate our ability to not only deliver superior growth rate but also profitable growth. We are committed to our disciplined approach in prioritizing growth while making progress towards our long-term profitability target. 2021 was also significant in terms of important investments we made towards our future. We substantially grew Fiverr Business to become a marketplace of fully vetted talent made it easier for customers to join it and created automatic segmentation mechanism to offer Fiverr Business to the most relevant audience. We established the seller tools group to focus on building the seller ecosystem including the launch of Seller Plus. We successfully integrated And.Co, a company we acquired and turned it into Fiverr Workspace. And we continued expansion of Promoted Gigs. We launched partnerships with leading B2B vendors to build co-branded sections of our marketplace with expert sellers offering a variety of vendor-specific services to their customers. Leveraging the creative talent pool from Working Not Working, we are building the next-gen AI-powered creative service platform to allow brands to assemble top-quality creative teams in just a few clicks. We acquired CreativeLive, further strengthening our professional development content library to expand our learning and development model for freelancers. We acquired a Freelance Management System, Stoke Talent, to expand our addressable market by enabling offline freelancer relationships for our customers as well. Last but not least, we continue to expand our international presence with non-English-speaking countries now contributing to 32% of our total revenue. All of these investments are essential building blocks towards our long-term vision of becoming an all-in-one talent cloud solution for businesses of all sizes. Fiverr has turned 12 today. Having started Fiverr at the beginning of the 2010s gives us a good perspective of the changes that we are all witnessing. The way people work is going through a fundamental transformation right now. On one hand, you've got more people leaving their jobs than ever before. People are not simply leaving one company to join another, but rather leaving the traditional workforce altogether. Based on a recent survey we conducted, 54% of HR professionals and hiring managers said that people who have left their companies end up working for themselves as freelancers or start their own businesses. On the other hand, businesses are struggling to attract and retain talent for the long-term. The time they take to hire full-time employees continues to increase and they face massive skill gaps to stay competitive in an ever-changing technology landscape. What this means is that businesses must go through a substantial change in how they think about working with talent in their workforce infrastructure in the next few years. This is going to be a lot like the shift companies had to go through when they moved their on-site hosted computing capabilities to cloud computing in the past 15 years. I remember back in the day when building a startup required you to first set up your own local computing capabilities and data centers, host your own servers and go through massive installation and configuration settings. Only then could you actually start building what you really wanted to build. And then very quickly, your servers got outdated, slowed down, and ran out of space. So there was the ongoing need for maintenance and updates. It was very expensive, very inefficient, and most importantly of all, very few companies in the world had the resources to be able to set up and regularly update to the best computing power with the latest technology. Cloud computing completely changed all of that. Not only is it easier, cheaper, and faster to set up with a minimum ongoing maintenance overhead, but also it empowers businesses of all sizes, big or small, in businesses of all industries, tech companies or not, to utilize the latest computing technology directly from the cloud. When you think about the workforce, it's very much the same. The challenges that businesses face with a static full-time workforce such as a slow hiring process, being expensive to maintain and retain, the lack of flexibility and being hard to keep up with the latest skills are very similar to the challenges of on-premise IT infrastructure. By leveraging Fiverr's talent cloud solution, businesses can not only become more nimble and cost-efficient but also be able to access the best talent on a project-by-project basis whether that project is simple and quick or complex and more long-term. And for our industry, it is even more powerful because on the other side of the solution, we are dealing with talent instead of servers. This means that at the same time we are building this talent cloud solution, we are also providing talent across the world with more opportunities, better opportunities, empowering them to pursue the work they love and to enjoy the lifestyle that comes with remote work. That is a world worth building. We believe the opportunity of talent cloud migration will continue to grow and evolve, and it will substantially expand our overall addressable market in the coming years. We are not only empowering a transition from offline to online freelancers but also the transition from a static workforce to a dynamic talent cloud solution. We envision a future where companies will keep a smaller team that focuses on core competency while leveraging the talent cloud for the execution of most projects. We've seen this already happen with Hollywood studios. In the early 1920s, studios owned the entire filmmaking process from creation to filming to distribution. Over time, they have switched to a system where their workforce primarily consists of freelancers. Ad hoc teams are assembled on a project-by-project basis and disbanded after a project is completed. It streamlines the operation and focuses resources on generating the best outcome rather than material overhead. This is where we're heading, building a platform to help businesses develop and execute a robust talent cloud solution. As we celebrate Fiverr's 12th birthday and as we kick off this new year, the team and I could not be more excited about the journey we are embarking on. As I mentioned at the beginning of my remarks, a lot of work has already gone into building this talent cloud platform. The fact that we've grown so much in the past two years allows us to substantially accelerate our pace of investment and our vision but at the same time march towards a long-term profitability model. We are more excited than ever and for all the reasons I laid out, believe that we are still in the very early stages of our journey. We expect to remain disciplined with our financial strategy and continue executing in a consistent manner. With that, I'll turn the call to Ofer who will share some financial highlights.

Ofer Katz, CFO

Thank you, Micha for this inspiring remarks and good morning everyone. Q4 was a strong quarter across all dimensions. Revenue was $79.8 million, up 43% year-over-year driven by 23% growth on active buyers and 80% on spend per buyer and a 210 basis point expansion on take rate. During the quarter, we saw that seasonality trends were largely normalized with strong engagements during weekdays and quieter days during weekends and holidays. E-commerce-related categories continue to be very strong in our marketplace as businesses invest in content, marketing, and web development to lead into the holiday shopping season. We also saw strong trends from emerging technologies such as blockchain, crypto, and NFTs. The democratization of how digital skills such as creative or digital marketing could be monetized creates a huge opportunity for the freelancer and our platform and the freelancer economy in general. Fiverr once again is at the forefront of recognizing this technological trend and empowering our community to grow and thrive. We are also very happy to see the continued momentum in our cohort retention. For the second year in a row, we see that our mature cohort experienced over 110% year-over-year retention. For new cohorts in 2019 and 2020, we are also seeing better revenue retention trends compared to historical growth at a similar life stage. We are very encouraged to see that the outside cohorts we acquired during the pandemic are at least as good as if not better than our older cohorts. While the data trend is still early, we do believe that our work in quality retention and category expansion has paid off. We continue to enjoy high customer satisfaction scores. As of December 31, 2021, our NPS per buyer is 67 and NPS for seller is 80. Our strong retention trends also reflect the macro tailwinds of how businesses are embracing the freelancer resource and increasing the adoption. The higher revenue retention across our cohort also has a compounding impact on the overall lifetime value of our value base which allows us to invest in the top of the funnel. Organic channels continue to be very strong and have benefited from the significant growth in the unaided brand awareness among our target customers. We also continue to be highly efficient with our performance marketing investment. The ROI for Q4 was approximately four months. We were able to keep our marketing dollars highly efficient as we focus on driving higher quality buyers increasing our average spend level as well as continued channel diversification and improving automation. We launched our new out-of-home campaign in January in New York. We are also accelerating our investment in TV for both traditional and programmatic channels. We are committed to a data-driven and disciplined approach to drive growth and marketing efficiency. We expect to continue improving sales and marketing leverage on a year-over-year basis. Now to guidance, for the first quarter of 2022, revenue is expected to be $85 million to $87 million representing year-over-year growth of 24% to 27%. Adjusted EBITDA is expected to be $1.5 million to $3.5 million implying a Q1 adjusted EBITDA margin of 2.9% at the midpoint. For full year 2022, we expect revenue to be in the range of $373 million to $379 million, representing year-over-year growth of 25% to 27%. Adjusted EBITDA is expected to be in the range of $27 million to $33 million representing an adjusted EBITDA margin of 8% at the midpoint. Given the unusual growth types we experienced last year, I'd like to provide additional color on the trends of our business outlook implied in our 2022 guidance. We expect the tough comp in the early part of 2021 will weigh on the growth rate during the first half of 2022 and that growth will accelerate in the second half of the year. We expect active buyers to grow in the high-single digits and spend per buyer to grow in the teens in year-over-year growth rate for the full year of 2022. The take rate is expected to be steady with modest upside. As Micha mentioned, the opportunity to empower the talent cloud migration is big and we have a strong roadmap to build Fiverr's talent cloud solution. We will continue investing in those initiatives in 2022. Growth continues to be our top priority. At the same time we are committed to take a disciplined approach to continue generating leverage and progressing towards our long-term EBITDA margin target. With that, we'll now turn the call over to the operator for questions.

Operator, Operator

Thank you. Our first question comes from Doug Anmuth of JPMorgan. Doug, your line is now open.

Doug Anmuth, Analyst

Thank you for taking the questions. I have two. First, I was just hoping you could talk more about the drivers of the take rate upside. I know you mentioned the price increase, but was curious about Promoted Gigs and the impact there and then also CreativeLive and Stoke Talent as well if there's any way to quantify what you saw in 4Q and then going forward? And how do you think about the sustainability or future expansion of take rate? So, that's kind of one big question. And then the second question we do get an increasing number of questions just around competition and new offerings from Upwork and LinkedIn. A huge market here for sure. Just was hoping you could comment on whether you're seeing any changes in the competitive landscape? Thank you.

Micha Kaufman, CEO

Hey good morning Doug. Thanks for the question. So, for the first one, I think you pretty much said it. The combination of added value services and products that we've been introducing throughout last year and this year has been contributing to the increasing efficiency of our take rate. So, essentially the growth of Promoted Gigs, what we're doing with subscriptions, milestone payments, our FX products and so forth, all in all, continue to contribute. And this is why we said in the past that as we continue evolving the business there's some modest opportunity to continue increasing the take rate.

Ofer Katz, CFO

Yes, I will also mention that the Seller Plus program, which monetizes on the seller side, is the subscription offering that Micha referenced earlier. I believe the other companies you mentioned, such as Stoke, have not yet made a significant contribution to the take rate. The fundamentals, particularly Promoted Gigs, are being expanded by more sellers and are contributing more. The Seller Plus program and Fiverr Learn are among the value-added services that have the greatest impact on the take rate. Regarding sustainability, we are confident that our guidance for the take rate reflects our direction, with potential for modest growth throughout the year.

Micha Kaufman, CEO

Yes, I'll take your question on competition. So at least for the time being, we continue to see the offline market as our biggest opportunity and therefore, also our biggest competitor. The updates or our tracking of companies like LinkedIn and Upwork haven't demonstrated that their business is impacting ours. We obviously continue to track it. But at this point, we haven't seen any impact on our business.

Doug Anmuth, Analyst

Okay. Thank you, both. Appreciate it.

Ofer Katz, CFO

Thank you.

Operator, Operator

Thank you for your questions, Doug. Our next question comes from Matt Farrell of Piper Sandler. Matt your line is now open.

Matt Farrell, Analyst

Hi, guys. Congratulations on strong results in the guidance and I appreciate the additional color on 2022 trends from a buyer's spend perspective. Could you just maybe provide some more color on the visibility you have for the year, particularly as we may have some more fits and starts and just seasonality changing as we've entered the new normal hopefully pretty soon?

Micha Kaufman, CEO

Hi, good morning. I'll reiterate our previous comments on how we approach future guidance and our outlook for the business. We base our guidance on what we currently know and do not account for any unforeseen events in our projections. What we've observed in Q4 and into this year resembles a more normalized business, similar to trends we saw before the pandemic. It's difficult to predict what might happen if another variant emerges or if the current one becomes more aggressive. However, the impact of market fluctuations due to Omicron has been minimal and has remained within our normal baseline, which is a positive sign. Regarding our guidance, as mentioned, we are not incorporating any speculative scenarios or unexpected macroeconomic events.

Ofer Katz, CFO

And this is Ofer. In terms of visibility, we said it all the way that the fundamental of the business remains very steady. And it goes to retention. We mentioned that from the shareholders letter retention for old cohort is higher than 110% throughout the period as of now. So the level of confidence that we have, in terms of visibility is very strong. I would add the efficiency on the marketing side, our ability to invest in a very unique unit economy environment of high return in a short period an ability to acquire high-value buyers those fundamentals remain – give us confidence in our ability to predict into the next few quarters.

Matt Farrell, Analyst

Thank you for that clarity. And then as we exit the pandemic here hopefully very soon can you kind of talk about where we are in the adoption curve of freelancing relative to where we were just two years ago? And how should we be thinking about that progress around the adoption curve moving forward? I think you have mentioned a 5% penetration of online in the past. Is that number the same, or have we moved a bit forward? Thank you.

Micha Kaufman, CEO

We have made progress, but the overall freelancing market continues to grow. Even if the percentage remains mostly unchanged, the overall activity is shifting because freelancing is expected to represent about 50% of the American workforce by 2030. This group is experiencing significant growth, and there is a notable skill shortage. Businesses are increasingly recognizing that the remote work model is effective, and if it suits full-time employees, it can also benefit freelancers. This trend appears to be happening more offline than online, but as we provide more robust online solutions and make them easier to integrate, we expect more companies to adopt them. Since a significant portion of talent in the US is not available for full-time roles, companies will need to find innovative ways to engage this talent. The platform we are developing addresses this demand efficiently.

Matt Farrell, Analyst

Thanks again, and congrats on the solid execution.

Micha Kaufman, CEO

Thank you.

Operator, Operator

Thank you for your questions. Our next question comes from Eric Sheridan of Goldman Sachs. Eric, your line is now open.

Eric Sheridan, Analyst

Thank you for taking my question. I hope everyone on the team is doing well. I have two questions, if I may. First, regarding the new product introductions and acquisitions made in 2020 and 2021, could you provide some insight into the momentum generated from those efforts as we moved from 2021 into 2022? I'm interested in understanding the rationale behind your decisions to build or buy and how these choices are influencing the business moving forward into 2022. My second question relates to the cloud computing analogy mentioned in your prepared remarks. As you pursue larger enterprises, how should we view the necessary investments in your go-to-market strategy or product development to tap into the larger opportunities within big enterprises? Thank you.

Micha Kaufman, CEO

Good morning, Eric, and thank you for your question. Regarding your inquiry about whether we choose to build new products or acquire existing ones, as mentioned in our opening remarks, all of these acquisitions and developments are laying the groundwork for what we call the talent cloud. We evaluate whether to build or acquire based on the availability of a top-tier solution that is synergistic and easy to integrate with our Fiverr platform. For instance, our recent acquisition of Stoke Talent was a strategic move. We recognize that most freelance activity occurs directly and often offline, so capturing those relationships and enhancing them with our platform's talent is essential. Our decision-making considered whether to develop this technology ourselves or integrate an existing solution. From a go-to-market perspective, our priority was to enter the market quickly, which we are very enthusiastic about. Regarding your question about the cloud solution and its impact on our go-to-market strategy, we are concentrating on buyer segmentation and consolidating our customer base initially before crafting a more comprehensive strategy later on. Through Fiverr Business, we have conducted numerous experiments merging brand and performance marketing with segmentation to identify the ideal customers for our services. We pair these customers with success managers to facilitate their engagement with our platform, which has proven effective. We certainly plan to create a more comprehensive approach in the future.

Operator, Operator

Thank you for your question. Our next question comes from Andrew Boone of JMP Securities. Andrew, your line is now open.

Andrew Boone, Analyst

Hi, guys. Thanks for taking my question. I have two please. You've mentioned a couple of times the opportunity with offline projects. Workspaces clearly start to address that. But can you talk about the offline opportunity more broadly? Does that need to move online, or are there other ways for you to address it?

Micha Kaufman, CEO

Good morning, Andrew. I think you've mentioned that you have two questions, or would you like me to address the first one?

Andrew Boone, Analyst

I was going to follow up on the second question. I'll follow up.

Micha Kaufman, CEO

A lot of the challenges that arise from working offline with freelancers stem from the lack of standardization in their integration within organizations. Our research indicates that many organizations cannot accurately state how many freelancers they employ, as it often varies by department or project. This creates significant challenges regarding work classification, compliance, governance, budget management, and sharing resources to identify talent experts across different departments who have proven effective. There is a significant opportunity to impose order in this area. This is where the idea of a freelancing management system, like Stoke Talent which we have acquired, comes into play. The primary challenge for companies is access to talent. Sometimes organizations have access to talent but require a system to manage it efficiently without overstepping budget or compliance guidelines. Other times, they may need additional talent and require access to it. The combination of the freelancing management system with market-based solutions and managed services provides a comprehensive solution we refer to as the Talent Cloud. This involves transitioning some aspects from offline to online and establishing a more organized approach for companies to engage with freelancers, whether offline or online.

Andrew Boone, Analyst

That makes sense. My second question is thinking more about duration on the marketplace right? So Fiverr, choice Fiverr inspire promoted listings all help you do that. But can you talk about just your progress in terms of better matching buyers and sellers and just duration more broadly in the marketplace? Thanks so much.

Micha Kaufman, CEO

Certainly. Quality is a key area of focus for us. We've implemented solutions to enhance how we categorize our offerings. With Fiverr Pro and Fiverr Business, we are concentrating on providing thoroughly vetted options for more advanced business customers. Within Fiverr Business, we offer the top 1% of our suppliers across all categories. Additionally, we leverage metadata associated with every project on our platform to improve matching. Since all transactions occur on Fiverr, we can monitor thousands of data points and even the smallest details, which helps us create better matches. For instance, if a professional specializes in a particular industry and we know a customer is from that industry, we can use that data for improved matching. This approach combines vetting, data analysis, segmentation, and personalized matching to align supply and demand effectively.

Andrew Boone, Analyst

Thank you.

Operator, Operator

Thank you for your questions, Andrew. Our next question comes from Jason Helfstein of Oppenheimer. Jason, your line is now open.

Jason Helfstein, Analyst

Hi. I'll ask two questions. So, one just on the kind of the topics being discussed. So, you're basically talking about offering a cloud product for businesses. Do you think about pricing that differently? Could that – does it – do they have to hire workers through that software? And then when you think about that typically an enterprise sale is more expensive than what you've historically focused on and so like how should we think about maybe marketing becoming less efficient as you move upmarket with a SaaS-like product? And then secondly, one of the concerns that we've heard in addition to competition and you talked about that is just our freelancers leaving the freelance market to become full-time employees. We don't have evidence of that, but it's a concern that you've heard from investors. So, curious to get your take on that?

Micha Kaufman, CEO

Good morning, Jason. Thank you for your question. I'll address the second point first, and the answer is no. In fact, we are observing the opposite trend, where full-time employees are leaving their jobs not to join other companies, but to become independent through freelancing or starting their own businesses. Regarding your first question, we've mentioned before that we may introduce various pricing structures and models over time. Currently, parts of our business operate on a transactional basis while others are more SaaS-oriented. These segments are relatively small, which is why we do not report them separately. Overall, we believe that within our comprehensive talent cloud solution, there is potential for different pricing models depending on whether the service is transactional or software usage-based. Concerning the costs of enterprise sales, we've shown that we can move upmarket without sacrificing the effectiveness of our marketing. We have become more focused on high-value clients and larger enterprises, and this shift has not impacted our marketing efficiency. The same applies to our success managers and inside sales teams. We are still working on buyer segmentation, but as of now, we have not seen a decline in efficiency. When we reach the stage of targeting enterprises, we will take the necessary steps to ensure success.

Ofer Katz, CFO

And Jason, just to augment from Micha, I think on the pricing model, there is no intent to reduce take rates on transactions. So as mentioned earlier, we do believe and we intend to sustain the take rate for the long run. Then on the freelancer leaving the freelancer market to become full-time employees, I would refer to the shareholder letter both for the case study. And then for the data related to the seller earnings on the marketplace with those who earn much, now responsible for 50% more of the business last year. So we see freelancers that use Fiverr as a channel to generate income actually using us much more to generate more revenue or more income on their side. So we don't see any slowdown in either joining new sellers or their earnings on the marketplace. On the contrary.

Jason Helfstein, Analyst

Thank you.

Operator, Operator

Thank you for your questions, Jason. Our next question comes from Bernie McTernan of Needham & Co. Bernie, your line is now open.

Bernie McTernan, Analyst

Great. Thanks for taking the questions. Two for me. First, discussion in the release on leaning into brand marketing spend. Can you talk about how big those investments have been and what's contemplated in the 2022 guide? And how you evaluate the ROI on that spend? And then second, mentioned in the release strong trends in demand for 3D given the rise of NFTs, crypto, and Roblox. Do you have to do anything to make sure that you have enough supply on the platform to meet that kind of demand, or does the marketplace just organically figure that out itself?

Micha Kaufman, CEO

Good morning, Bernie. Thank you for your questions. Regarding your first question about brand marketing, we don't separate brand marketing from performance marketing in our reporting. We consider performance marketing to be the larger component. We utilize both strategies in a way that they complement each other, driving everything from awareness and consideration to conversion. When brand marketing is executed efficiently, it enhances the efficiency of performance marketing, as customers are not new to our brand. There are various methods to evaluate brand marketing. A straightforward approach involves testing brand marketing in a specific location, allowing us to compare baseline performance before and after the campaign to determine its impact. Overall, it is crucial to view brand marketing as a long-term investment. We have been building our brand equity for several years and have seen significant growth in unaided brand awareness as a result of our investments. Regarding your question about NFTs, we typically see supply come to us entirely organically, so we don’t need to actively generate supply. This has generally been true in the case of NFTs as well. Our catalog is rich in quality, and we focus on enhancing the quality and structure of our catalog while maintaining market-based integrity to ensure a high-quality experience. In terms of supply, we definitely have enough to meet the growing demand for these services.

Bernie McTernan, Analyst

Understood. Thank you. And just one follow-up if I could. Getting a few inbound questions on the gross margin. It sounds like there's some hiring that was done to catch up to support teams in the fourth quarter. Is this fourth quarter gross margin the right way to think about 2022?

Ofer Katz, CFO

We do have some catch-up coming into as we speak. So we believe there will be a shortfall in the gross margin of approximately 1% throughout the year.

Operator, Operator

Thank you for your questions. We'll now take our last question from Brad Erickson of RBC Capital Markets. Brad, your line is now open.

Brad Erickson, Analyst

Hi. I guess a couple for Ofer just following up on sort of what's baked into the guide. On the take rate specifically, you've said a few times and in the letter that the assumption is effectively flat with some upside. So just to clarify, do we assume that that flat assumption is what's baked into the guide and the modest upside you mentioned would be upside to those numbers? If you could just clarify that. And then on the sales and marketing leverage, you called it out in the letter you've talked about it on this call that you expect to continue to see that this year. And then, I think you also said that you're going to accelerate some of those investments in brand and programmatic channels. Maybe if you could just help us with sort of what the offset is there between those two comments?

Ofer Katz, CFO

Thank you, Brad. So, on the first question, as we expand Promoted Gigs and then expand other services like Seller Plus, we do believe that because of the nature of this revenue, they are going to contribute a little bit more to the overall take rate. Again, we're trying to be solid and make sure that everyone understands that there is an upside, but yes, it's going to be moderated. Throughout 2021, as I recall, we have changed or updated the service fee that created a trigger to the overall take rate. This is not going to happen again. So that is why I want to make sure that we understand that there's a flat with some modest improvement to take rate not beyond. And then on the question on the sales and marketing, yes, we do expect to see leverage. We have seen that throughout the last few years on a quarterly basis. There is a very clear path for us to enjoy the leverage of scale. As the business grows, we are able to maintain growth while investing more dollars. But percentage-wise of revenue, sales and marketing is declining. We expect to continue this trend throughout the year.

Brad Erickson, Analyst

Got it. And then maybe one follow-up, if I could, one last one, I think there have been a few questions around the changes in freelancer supply given the great resignation and all that stuff. Do you think the business is seeing more or less tailwinds from the fact that corporate's not having enough labor inflation seeing maybe bigger buyer activity out of that? Any sort of like a mix shift that might be visible from a large enterprise standpoint? I know you haven't talked about it, but obviously, it seems like everyone is hiring. I'm just curious if that may be a tailwind you're seeing at the moment as well. Thanks.

Micha Kaufman, CEO

So, I think that it's a great point. And this I think is baked into the behavior of cohorts that are coming from larger businesses and their ability and willingness to spend more and be more engaged on the platform. So, we're definitely seeing that. A part of it is the great resignation and other parts is just shortage in general. There's more businesses, there's more need for talent and therefore, I think that companies are looking for freelancers as a viable solution. And now, after the pandemic, working remotely has become a norm and something that most organizations can do as a standard thing. So definitely a tailwind for us. Thank you.

Operator, Operator

Thank you for your questions, Brad. At this time we have no further questions. So I'll hand that over to Micha Kaufman for any closing remarks.

Micha Kaufman, CEO

Thank you, Charlie for managing this call and thank you everyone for participating in the call today. We look forward to speaking with all of you soon. Have a great day.

Operator, Operator

Thank you all for joining today's call. You may now disconnect your lines and have a lovely day.